Session Three Diagnosing Your Financial Situation Living Wi$ely Session Three Diagnosing Your Financial Situation

Homework Review Personal financial statement Personal cash flow statement Expense category hardest to quantify Reactions to your financial physical What you learned

Diagnosing Your Financial Situation Are we spending less than we earn ? Are we saving for future needs ? Is our debt under control ?

Making a Diagnosis Look at Steve and Jessica … Spending less than they earn ? Saving for future needs ? Debt under control ?

Steve & Jessica’s Diagnosis Spend more than they earn No savings Not giving Too many credit cards Minimum credit card payments consumes 4 % of their income vs. a goal of 0 Consumer debt payments consumes 12.5 % of their income vs. a goal of less than 10% Student debt payments consumes 7 % of their income vs. a goal of less than 5%

Steps to Writing a Prescription If credit cards are being violated, cut them up Examine cash expense and reduce as necessary Repeat step two Repeat step three Sell assets Downsize to reduce debt Increase income

Prescription for Steve and Jessica Cut up credit cards Reduce expenses Sell the boat Sell a car Increase Income

Summary Start with a financial physical Make a diagnosis Write a prescription

Homework Do a diagnosis and prescription for your own situation Read Three Simple Rules Part 4 Living by the Rules